💎 Fed’s first rate cut since 2020 set to trigger market. Find undervalued gems with Fair ValueSee Undervalued Stocks

Economists expect Brazil 2017 inflation to be below official target

Published 09/25/2017, 08:22 AM
Updated 09/25/2017, 08:30 AM
© Reuters. FILE PHOTO: People shop at the Municipal Market of Sao Paulo in downtown Sao Paulo, Brazil

By Bruno Federowski

SAO PAULO (Reuters) - Economists expect Brazil's inflation rate to end 2017 below the government's target range for the first time ever, according to a central bank survey on Monday.

Consumer prices, as measured by the benchmark IPCA index, are likely to rise 2.97 percent in 2017, according to the median of around a hundred forecasts, down from 3.08 percent a week ago.

If confirmed, that rate would be at the bottom end of the central bank's official target range of 4.5 percent plus or minus 1.5 percentage points. The bank has missed its inflation target three times in the last two decades, but has never undershot it.

Indeed, this year's inflation rate may be even lower, with the five most accurate forecasters in the central bank survey predicting a 2.81 percent rate.

The results suggest the central bank may take its time to halt interest rate cuts, providing further support to Brazil's recovery from the deepest recession in a century.

According to the survey, the Selic rate, currently at 8.25 percent, is expected to end 2017 at a 7 percent all-time low and remain there until at least the end of 2018.

Monetary easing seem to be having some effect on household spending, with several economic indicators - from retail sales to gross domestic product (GDP) and employment - beating expectations in recent months, but not enough to generate substantial price pressures.

Inflation has held near 18-year lows for months as a surprisingly strong agricultural harvest hammered food prices lower. Services inflation, which is closely tied to aggregate demand, also remains subdued.

© Reuters. FILE PHOTO: People shop at the Municipal Market of Sao Paulo in downtown Sao Paulo, Brazil

Economists polled by the central bank revised their forecasts for GDP growth in 2017 and 2018 to 0.68 percent and 2.30 percent, respectively, up from 0.60 percent and 2.20 percent.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.